Eurozone Ministers Demand More Measures From Greece, Hold Back Aid

Eurozone Ministers Demand More Measures From Greece, Hold Back Aid



Eurozone finance ministers on Thursday deferred the approval of a second bailout package for Greece, saying that the debt-ridden euro member should ratify a new set of austerity measures for receiving the EUR130 billion ($172.52 billion) aid to finance its debts.
Eurogroup chairman Jean-Claude Juncker made it clear after the meeting in Brussels that there will be "no disbursement before implementation (of the new set of conditions)." Earlier on Thursday, leaders of the political parties in the coalition government of Greek Prime Minister Lucas Papademos reached a compromise deal on the adoption of the measures demanded in return for a new bailout.
The new bailout money would leave Athens with sufficient funds to repay a EUR14.5 billion bond due on March 20. However, Eurozone leaders urged additional spending cuts from Greece, which repeatedly failed to carry out planned reforms.
Juncker, who is also Luxembourg's Prime Minister, said that the Greek parliament must ratify the package on Sunday and urged it to find a further EUR325 million in savings to cover budget shortfall for 2012.
Juncker also demanded "strong political assurances" from the leaders of the coalition parties on the implementation of the program.
All these conditions need to be fulfilled before Eurozone finance ministers reconvene next Wednesday in Brussels to decide whether they are in place to proceed.
EU Economic and Monetary Affairs Commissioner Olli Rehn said after the meeting that the deal on private sector involvement is "practically finalized, even if it will be formally approved as part of the overall package, I trust next week." The debt restructuring plan aims to reduce Greece's debts by around EUR 100 billion, taking it to a more "sustainable" level of 120 percent of GDP by 2020 from the current 160 percent.
In the new bailout package, the troika of creditors -- EU, ECB and IMF -- demands a 22% reduction in minimum wages, 15% pension cuts and laying-off 15,000 civil servants by end of 2012.
The deal, however, is said to have left holiday bonuses, known as 13th and 14th month salaries, untouched. The proposed measures, aimed at helping the Greek government save about EUR3.2 billion, have triggered widespread protests and strikes across Greece. Workers unions claim that such measures will impoverish the country further and drag it deeper into recession.
Greece, which has an estimated debt of EUR350 billion, has already availed a joint EU-IMF EUR110 billion- rescue loan in May 2010, out of which about EUR73 billion have been given to Athens in a number of installments. In addition, EU leaders agreed at a summit held in October to provide Greece with a new EUR130 billion rescue package and persuade private investors to bear 50 percent loss on their Greek holdings.
The Greek government has been under immense pressure from the other eurozone members to accept the conditions of the new bailout package to avoid defaulting on its debts as well as a possible exit from the single currency bloc.


More FOREX-news on pages InstaForex.Com